The good news is that, after 6 quarters, the rate of investment starts is looking up. The latest CMIE data for December 2013 shows average four-quarterly new project starts at R1,06,400 crore, or a 29% hike on a qoq basis. The problem, however, is that this is led almost entirely by public sector investment—at R71,000 crore , this rose 73% on a qoq basis. Private investment, on the other hand, was around R20,000 crore for the quarter, down from an average of R1,50,000 crore per quarter since 2004. Since December 2005, this is the first time public sector investments have outpaced those by the private sector. With fewer new projects, the number of completed projects is falling steadily, by around a fourth over the year, to a little under $15 billion in the December 2013 quarter.

Not surprisingly, the backlog at BHEL, the country’s largest producer of power equipment at the end of the September quarter was just over R1 lakh crore, a 16% yoy fall. Indeed, if you look at the entire capital goods sector ex-L&T, order books contracted 12% in the September quarter yoy, by 12.3% in the June quarter, 10.8% in the March quarter and 16.3% in the December 2012 quarter. Related sectors, such as cement, are likely to see a similar collapse and, analysts are looking at just a 4% growth in cement demand this year, perhaps 6-7% in FY15. In the case of commercial vehicles, sales of M&HCVs at Tata Motors fell 22% yoy in December and the drop in LCVs’ was even sharper at 52% yoy—given fleet utilisation is at a historic low of around 60%, this segment isn’t going to pick up any time soon. Weak investment demand has even hit consumer demand and, in December, demand formotorcycles contracted.

So, a lot depends on how fast the Cabinet Committee on Investments (CCI) works. As compared to the R19.2 lakh crore of stalled projects that the CCI is looking at fast-tracking, around R4.2 lakh crore have been cleared, and of these, over 80% of clearances revolve around Coal India being told to sign fuel agreements with the firms and power regulators told to allow tariff hikes. But with many SEBs in poor financial shape and demand very low, starting the cleared projects will take a while. Which means after CCI clearances, the projects need to be restructured—as in the highway projects before the Rangarajan panel—or simply be rebid out all over again.